Correlation Between 1369 Construction and Vietnam Dairy

Can any of the company-specific risk be diversified away by investing in both 1369 Construction and Vietnam Dairy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining 1369 Construction and Vietnam Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1369 Construction JSC and Vietnam Dairy Products, you can compare the effects of market volatilities on 1369 Construction and Vietnam Dairy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in 1369 Construction with a short position of Vietnam Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1369 Construction and Vietnam Dairy.

Diversification Opportunities for 1369 Construction and Vietnam Dairy

0.93

Correlation Coefficient

1369 Construction  Vietnam Dairy

Almost no diversification

The 3 months correlation between 1369 and Vietnam is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding 1369 Construction JSC and Vietnam Dairy Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Dairy Products and 1369 Construction is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on 1369 Construction JSC are associated (or correlated) with Vietnam Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Dairy Products has no effect on the direction of 1369 Construction i.e., 1369 Construction and Vietnam Dairy go up and down completely randomly.

Pair Corralation between 1369 Construction and Vietnam Dairy

Assuming the 90 days trading horizon 1369 Construction JSC is expected to generate 2.55 times more return on investment than Vietnam Dairy. However, 1369 Construction is 2.55 times more volatile than Vietnam Dairy Products. It trades about 0.02 of its potential returns per unit of risk. Vietnam Dairy Products is currently generating about -0.03 per unit of risk. If you would invest  572,820  in 1369 Construction JSC on October 11, 2024 and sell it today you would earn a total of  57,180  from holding 1369 Construction JSC or generate 9.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

1369 Construction JSC  vs.  Vietnam Dairy Products

1369 Construction JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1369 Construction JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vietnam Dairy Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vietnam Dairy Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with 1369 Construction and Vietnam Dairy

The main advantage of trading using opposite 1369 Construction and Vietnam Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1369 Construction position performs unexpectedly, Vietnam Dairy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vietnam Dairy will offset losses from the drop in Vietnam Dairy's long position.

The idea behind 1369 Construction JSC and Vietnam Dairy Products pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.